Smith v. Hickman
Smith v. Hickman
Opinion of the Court
Opinion by
The only alleged error assigned in this appeal is the entry of the decree by the learned court below. The facts are undisputed. The plaintiff had on August 9, 1889, executed an oil and gas lease to the predecessors in title of the respondents; one well had been drilled upon the land, from which gas had issued in paying quantities, and been utilized by the lessees and their successor in title, the appellant, down to the year 1899. Prior to the filing of the plaintiff’s bill the appellant company abandoned the said lease and well and sold the casing in the well to the respondent Hickman. The plaintiff thereupon tendered the value of the casing in the well, and the rig, and demanded possession of the well, which the respondents refused, denying that plaintiff had a right to take the well upon payment of the value of the casing and rig.
The only question presented for the consideration of this court is the construction to be put upon the following paragraph of the original lease: “ It is further agreed that if gas is found in paying quantities the consideration in full to the party of the first part, instead of royalty, shall be $500 per annum for the gas from each well when utilized. In case gas is not found in sufficient quantity to market, the party of the first part can, if he wishes,’have the gas by paying ordinary price for the casing and rig.” The contention of the appellant is that gas having been produced by this well in paying quantities, and the same having been utilized, the plaintiff was not
Decree affirmed at cost of appellant.
Reference
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- Contract — Construction of particular paragraphs. In construing a paragraph of an agreement the court will consider the entire contract, and give to it its legitimate and fair meaning; and in arriving at the meaning of a phrase in one paragraph of a contract it is proper to consider the meaning which was attached to it by the parties in another part of the contract, where the phrase was used in the same connection and with regard to the same subject-matter. Words and phrases — Oil and gas lease — Found in paying quantities. A contract in an oil and gas lease containing the phrase “ and as much longer as oil or gas is found in paying quantities,” means and as much longer as, under the operations of the lease, oil or gas continues to be produced in paying quantities. So long as the wells drilled by the lessee continue to supply oil or gas in paying quantities the lease remains in force. Oil and gas lease — Election of lessor to take well and rig, etc. Where an oil and gas lease provides for the abandonment of a nonproductive well, and that in such event the lessor may have the gas “ by paying the ordinary price for casing and rig,” upon the abandonment of a well which had been productive or paying, but which had become nonproductive, the lessor may, if he so elect, take the well by paying for the casing and rig; to deny his right would be to play upon the meaning of words.